April 25, 2022
Hitachi Zosen Corporation
Representative Sadao Mino, President and CEO
(Security Code: 7004; Prime Market, Tokyo Stock Exchange)Investigation
General Manager Hiroshi Miyazaki
Business Planning Department (Telephone +81-6-6569-0005)
Notice of Extraordinary Revenues, Extraordinary Losses and Earnings Forecast Revisions
We hereby inform you that we recorded exceptional income and exceptional losses during the financial year ended
March 31, 2022 and announce the following. In addition, due to the improvement in operating profit and ordinary profit, we have revised the profit forecast published on February 7, 2022 as follows.
1. Recording of negative goodwill (exceptional income)
As stated in the “Notice regarding the acquisition of shares of the companies of the Steinmüller group Babcock Environment
(to make them subsidiaries)” issued on December 8, 2021, our consolidated subsidiary Hitachi Zosen Inova AG, having entered into a share purchase agreement on December 9, 2021, acquired all of the shares of Steinmüller
Babcock Environment GmbH (current company name: Hitachi Zosen Inova Steinmüller GmbH) on February 9, 2022 and made the company its consolidated subsidiary. As a result, a negative goodwill gain of 3.8 billion yen will be recorded as exceptional income in the consolidated financial statements for the year ended March 31, 2022.
2. Recording of an impairment loss (exceptional loss)
(1) Our company’s Ibaraki works
In our wholesale electricity business, including our Ibaraki plant, we have determined that there are signs of fixed asset impairment as cash flow from operations continues to be negative. Following a review of future recoverability, we expect to write down the carrying amount to recoverable amount and record an impairment loss of JPY 1.6 billion as an extraordinary loss in the non-consolidated financial results for the fiscal year ended March 31, 2022 The impact on consolidated income is the same amount.
(2) Japan Natural Energy Corporation
In our consolidated subsidiary, Natural Energy Japan Corporation (hereafter “NEJ”), we have determined that there are signs of impairment of fixed assets since the cash flows generated by its operating activities continue to be negative. Following a review of future recoverability, the carrying value was written down to the memorandum value and an impairment loss of JPY 2.1 billion was recorded. Accordingly, we expect to record the same amount as an extraordinary loss in the consolidated financial results for the year ended March 31, 2022.
3. Recording of a provision for warranty loss (exceptional loss) (unconsolidated)
As described in 2. (2) above, due to the increase in the amount of excess debt resulting from the recording of impairment of NEJ’s fixed assets, we expect to record an exceptional loss of 1. JPY 7 billion as warranty loss provision for NEJ in the non-consolidated financial results for the year ended March 31, 2022.
The provision for losses on guarantees is recognized only in the non-consolidated financial statements and eliminated in the consolidated financial results; there is therefore no impact on the consolidated result.
4. Revisions to consolidated earnings forecasts
For the year ended March 31, 2022, operating profit will deteriorate due to an increase in the provision for losses on construction projects, but it will improve thanks to the reduction in construction costs and fixed costs .
In addition, ordinary income will improve due to improved foreign exchange gains and losses and improved gains and losses on investments under the equity method. In addition, profit attributable to Hitachi Zosen shareholders will improve due to lower tax charges. We hereby revise the consolidated earnings guidance for the year ended March 31, 2022 as follows, although we are currently compiling them.
There is no change in the year-end dividend forecast as a result of this change.
Revision of consolidated earnings forecasts for the year ended March 31, 2022 (April 1, 2021 – March 31, 2022)
Profit attributable to shareholders of
Net earnings per share
Previous forecast (A)
Revised Forecast (B)
(Reference) Results of the previous year
(Year ended March 2021)
※The above predictions are based on the information currently available to us and some that we believe to be reasonable. Actual results may differ from these forecasts due to various factors.